Clause 28
Company Law Reform Bill [Lords]
4:45 pm
Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)
I am grateful for the amendment being tabled, because it raises an important issue:what happens when a provision in a company’s memorandum immediately before the commencement of the Bill comes into conflict with a provision in the same company’s articles? That is an important issue because, as the hon. Gentleman said, where there is conflict between provisions in the memorandum and those in articles, the provisions in the memorandum take precedence. We will need to make further proper and appropriate arrangements to ensure that the position regarding competing provisions is clear.
The hon. Gentleman referred to the debate in the other House where we gave an undertaking to look at that and other transitional issues. As we said this morning, transitional issues run through many clauses in the Bill, and there will be a round of consultation on that.
As it was in the other place, clause 882 has become clause 921 in the Bill before us. That is why I looked a little bewildered. If the hon. Gentleman were to look at clause 921, he would see that it provides for a power to make transitional arrangements. During the summer and early autumn, we hope to consult on what those transitional provisions should be. I hope he agrees that we should legislate after we have explored all the issues with interested parties. That is what we intend to do.
The clause is trying to provide a default position to give legal certainty when something goes wrong. We want to be careful about enacting a rule that could result in obsolete provisions being given more weight than was intended. For example, it might be that we should allow existing companies a transitional period in which to consider the effect of subsection (1) and whether each provision of their memorandum, which will be deemed part of their articles, should be retained as ordinary provision amended, removed altogether or entrenched.
We would rather decide how to deal with that substantive point on conflicts at the same time as we make rules on when, and in what circumstances, the clause and other new rules on companies’ constitutional documents will apply to existing companies. So, in the spirit of that explanation, I hope the hon. Gentleman is content and will withdraw the amendment.